California’s Environment Needs a Water Budget

Allocating water for environmental needs has been one of the more controversial, and perhaps most misunderstood, aspects of water management during this drought. The aquatic environment has been particularly hard hit, with many fish species close to extinction.

California needs to change course to prevent extinctions and further declines in our river and wetland ecosystems. Our recent report Allocating Water in California: Directions for Reform calls for modest changes in how we manage water in times of scarcity that could significantly reduce the social, environmental and economic costs of drought. A practical solution to the aquatic ecosystem crisis is to establish “environmental water budgets” (EWBs) for priority watersheds where threats to ecosystem health and native species are high.

It would work like this: the State Water Board, in partnership with the California Department of Fish and Wildlife and other agencies, would use available information to prescribe the water needed to maintain fish and other species in good condition. Local water users would help develop procedures for meeting these requirements (much as they are now required to do under the Sustainable Groundwater Management Act). As part of this effort, local stakeholders—with state support—would be encouraged to improve the scientific basis for setting these allocations and propose alternative ways to meet environmental needs.

A novel principle is that this baseline water budget would belong to the environment and be managed by a designated environmental water manager. The manager could purchase, trade, and even sell water to best serve environmental needs. Surplus water sales would raise funds for other environmental uses, such as habitat improvements, or for water purchases during dry times. This system would provide greater flexibility and security than the current approach of setting minimum environmental flow and water quality standards (which are often relaxed when times get tough for other water users).

There are two ways to implement this idea. The water board could establish the EWB as a regulatory set-aside—which would ensure that the EWB water could not be diverted by other water right-holders. Or, similar to the Australian approach, the water board could define the EWB as a water right—one that would have top priority within the water rights system, with the exception of emergency public health and safety needs.

Some existing water right-holders may be resistant to the environment leap-frogging ahead of them in seniority. But the environment already effectively has the senior right under a variety of laws protecting water quality, critical habitat, and endangered species. The problem is that these regulatory standards are often ignored or too easily modified when water is scarce.

The EWB approach offers value for water right-holders. It reduces regulatory uncertainty by giving the environment a water budget that it has to operate within. It provides flexibility in managing environmental water. And it encourages cooperation with local water users, who have a stake in its successful implementation.

This proposal makes the environment a cooperating partner in water management—one that sits at the table when tough decisions are being made. Partnerships, rather than competing interests, are a more effective approach to managing water during challenging times.